Annual Performance Report - TFA Interior Projects Limited (2017-2018) (2)

Annual Performance Report

TFA Interior Projects Limited
2017/2018

Executive Summary

REVENUE
Revenue £13,246,156 (Last year £10,524,329)
Our most successful year to date. Positive trend upwards.

PROFITABILITY
Profitability Ratio 2.14% (Last year 0.72%)
Positive trend upwards. Strategies to improve profitability include: increasing price, increasing sales volume, reducing cost
of sales and reducing operating expenses.

ACTIVITY
Activity Ratio 16.94 times (Last year 21.17 times)
Activity is based around enquiry levels and orders booked. This is actually a very minor change from the previous year.
There was a drop in the number of enquiries for last year. Whilst this should be monitored at all times for us its more about
the quality of the enquiry as opposed to the quantity

EFFICIENCY
Return on Capital Employed 36.31% (Last year 15.27%)
Positive trend upwards. A higher ROCE% is favourable, indicating that the business generates more earnings per £1 of
capital employed.

CASH FLOW
Free Cash Flow £83,111
Free Cash Flow is positive. After paying its operating expenses and investing for future growth (capital expenditures) the
business has generated cash. This cash is available to be paid back to the suppliers of capital.

DEBT
Net Debt -£254,435 (Last year -£170,398)
Net debt levels have fallen.

KPI Results

This chart shows KPIs grouped into performance perspectives.

%

GP Margin of Orders Booked

Value
Value

OOrfdOerrdseSrEesncSqueurcieruydreLedvels
PROFITABILITY
Net Profit After Tax % ACTIVITY CASH FLOW
Op. Profit % Cash on Hand
NetCVaarsihabFlleoCwasMharFlgionw RevEexGnpureoensGsserPoCwrohtafhint gGerowth
Gross Profit % 2017/2018 Op. Profit Growth

Revenue Sort: By Perspective

GROWTH

4 73% 11

OFF TRACK ON TRACK

15 KPIs

KPI Results

This chart shows KPIs sorted by degree of importance. KPIs are classified as either low, medium, high or critical
importance.

Cash FloCwaMsEhaxoprgneniHnseanCdhange Op. Profit Growth GrossGPProEfVitanlqu%%ueirMOyrarLdeegirvsnelSosefcuOrredders Booked
RevenRueeveVnaulueeGOrofwOthrders Secured
Op. Profit %
Net VaNrieatbPleroCfGiatrsoAhsfstFePlroroTwfaitxG%rowth

HIGH CRITICAL

2017/2018

Sort: By Importance

4 73% 11

OFF TRACK ON TRACK

15 KPIs

KPI Results

1 ALERT RESULT TARGET TREND IMPORTANCE

A PROFITABILITY 2017/2018 vs 2016/2017

Total Revenue £13,246,156 £12,000,000 25.9% Critical

Gross Profit Margin 17.25% 18.57% -0.93% Critical

Operating Profit Margin 6.18% 6.44% 1.79% High

Net Profit After Tax Margin 2.14% 3.04% 1.42% High
B ACTIVITY

Enquiry Levels 911 900 - Critical

Value Of Orders Secured £13,559,000 £11,520,000 - Critical

GP Value Orders Secured £3,040,325 £2,304,000 - Critical

% Margin of Orders Booked 22% 20% - Critical

C CASH FLOW

Cash on Hand £254,435 £0 49.3% High

Cash Flow Margin 0.53% 3.04% 0.38% High

Net Variable Cash Flow 26.03% 18.57% -6.31% High

D GROWTH

Revenue Growth 25.86% 0.41% 12.15% Critical

Expense Change * 1.02% 3% -8.35% High

Gross Profit Growth 19.44% 0.17% 12.35% High

Operating Profit Growth 77.36% 2% 76.83% High

* For this metric, a result below target is favourable

Alerts

Net Profit After Tax Margin

The Net Profit After Tax margin is less than the alert level of 3%. An immediate review of strategies to help improve the bottom line is
required. Strategies to improve this KPI may include: increasing price, increasing sales volume, reducing cost of sales and reducing
operating expenses.

Profitability

REVENUE EXPENSES TO REVENUE RATIO MARGIN OF SAFETY

£13,246,156 93.82% £4,746,560

A measure of the total amount of A measure of how efficiently the The breakeven safety margin
money received by the company for business is conducting its operations. represents the gap between the actual
goods sold or services provided. revenue level and the breakeven
point.

£16M REVENUE REVENUE
£8M
£0 VARIABLE COSTS £13,246,156
FIXED COSTS
TOTAL COSTS

£12,427,362

BREAKEVEN POINT

£8,499,596

MARGIN OF SAFETY

£4,746,560

VARIABLE COSTS
£0.83 PER £1 OF REVENUE

FIXED COSTS
£1,466,202

Profitability can be further improved by improving price, volume, cost of sales and operating expense management.

Top 10 Revenue Accounts Top 10 Expense Accounts

Sales £13,039,508 Payroll Expenses £630,075
Applications Balance £119,672 Corporation Tax £122,920
Retention Current £42,876 Advertising & Marketing
Office Rental £39,480 Professional Fees £98,092
Sundries £3,113 Fuel - Mileage Claims £58,596
Telephone / Internet £1,506 Rent £52,295
£50,000

Profitability Charts

Gross Profit 2017/2018 % of Revenue 2014/2015 2015/2016 2016/2017
Operating Profit £2,284,996 17.3% £1,475,288 £1,786,247 £1,913,031
Earnings Before Interest & Tax 6.2%
Earnings After Tax £818,794 2.1% £232,736 £459,209 £461,651
£284,019 2.1% £41,834 £63,116 £75,920
% Margins £284,019 £41,834 £63,116 £75,920

30% Gross Profit % Operating Profit % Net Profit After Tax %

20%

10%

0% 2015/2016 2016/2017 2017/2018
2014/2015 2015/2016 Expense to Revenue %

Expense-to-Revenue (%) 2016/2017 2017/2018

97%
96%
95%
94%
93%

2014/2015

Cash Flow

OPERATING CASH FLOW FREE CASH FLOW NET CASH FLOW

£70,724 £83,111 £84,037

Operating cash flow is simply the cash Free cash flow is the cash generated Net cash flow is the cash left after
generated by the operating activities by the business, after paying its subtracting expenditures from
of the business. Operating activities expenses and investing for future financing activities from the free cash
include the production, sales and growth. It is the cash left after flow. This includes the cash impact
delivery of the company's product subtracting capital expenditure from from financing activities. Financing
and/or services as well as collecting operating cash flow. The term "free activities include the inflow of cash
payment from its customers and cash flow" is used because this cash is from investors such as banks or
making payments to suppliers. free to be paid back to the suppliers of shareholders, as well as the outflow of
capital. cash to shareholders as dividends.

Cash Received Cash Spent £0 £5M £10M £15M
add: Revenue £13,246,156
less: Cost of Sales -£10,961,160
less: Expenses
add: Other Income -£2,000,977
less: Cash Tax Paid £0
£133,938

add: Change in Accounts Payable -£78,442
add: Change in Other Current Liabilities £253,216

less: Change in Accounts Receivable -£234,422
less: Change in Inventory -£14,691
less: Change in Work In Progress £0
less: Change in Other Current Assets -£272,893

OPERATING CASH FLOW £70,724

less: Change in Fixed Assets (ex. Depn and Amort) £11,953

less: Change in Intangible Assets £0

less: Change in Investment or Other Non-Current Assets £434

FREE CASH FLOW £83,111

less: Net Interest (after tax) £0
add: Change in Other Non-Current Liabilities £928

less: Dividends £0
add: Change in Retained Earnings and Other Equity -£3
less: Adjustments £0

NET CASH FLOW £84,037

Net Cash Flow can also be calculated as:
Change in Cash on Hand £84,037 (Open: £170,398, Close: £254,435) — Change in Debt £0 (Open: £0, Close: £0)

Cash Flow Charts

Operating Cash Flow 2017/2018 2014/2015 2015/2016 2016/2017
Free Cash Flow £70,724 £179,687 -£283,612 £16,336
Net Cash Flow £83,111 £118,758 -£303,384 £38,703
Cash on Hand £84,037 £569,061 -£428,565 £29,902
£569,061 £140,496
Operating Cash Flow £254,435 £170,398

£200K 2015/2016 Operating Cash Flow

£0 2015/2016 2016/2017 2017/2018
Free Cash Flow
-£200K
2016/2017 2017/2018
-£400K
2014/2015 Cash on Hand Accounts Receivable

Free Cash Flow

£200K

£0

-£200K

-£400K
2014/2015

Cash & Receivables

£1,000K

£500K

£0 2015/2016 2016/2017 2017/2018
2014/2015

Growth

REVENUE GROWTH EBIT GROWTH ASSET CHANGE

25.86% 274.1% 16.48%

A measure of the percentage change A measure of the percentage change A measure of the percentage change
in Revenue for the period. in EBIT for the period. in Total Assets for the period.

Change in Key Drivers (from prior year)

Revenue Cost of Sales Expenses Receivable Days Inventory Days Payable Days
Up 25.9% Up 27.3% Up 1% Up 9.5 days – Down 25 days

GROWTH FROM 2014/2015 to 2017/2018 *

£200K EFFICIENCY QUALITY
£100K GAINS GROWTH

EARNINGS BEFORE INTEREST & TAX £0 DECLINE STRESS
-£100K

-£200K

£300K £400K £500K £600K £700K

TOTAL OPERATING INVESTMENT

* Total Operating Investment £782,134; Earnings Before Interest & Tax £284,019

Size of the circle shows the Vertical position of the circle Horizontal position of the circle
recency of the result shows the growth in Earnings shows the growth in Total
Before Interest & Tax Operating Investment

Financials 2017/2018 2016/2017 Variance %
£13,246,156 £10,524,329 25.86%
PROFIT & LOSS £10,961,160 27.29%
Revenue £8,611,298 19.44%
Cost of Sales £2,284,996 £1,913,031 1.02%
Gross Profit £1,466,202 £1,451,380 77.36%
Expenses
Operating Profit £818,794 £461,651 -100.00%
Other Income £0 £298 38.53%
Other Expenses
Earnings Before Interest & Tax £534,775 £386,029 274.10%
Dividends £284,019 £75,920 –
Retained Income £0
£0 £75,920 274.10%
BALANCE SHEET £284,019
ASSETS 2016/2017 Variance %
Cash & Equivalents 2017/2018
Accounts Receivable £170,398 49.32%
Inventory £254,435 £611,615 38.33%
Work in Progress £846,037 24.26%
Other Current Assets £60,549
Total Current Assets £75,241 £0 –
Fixed Assets £0 10.10%
Intangible Assets £2,701,294 17.10%
Investments or Other NCAs £2,974,187 £3,543,857 -21.45%
Total Non-Current Assets £4,149,899
Total Assets £55,725 –
£43,772 £0 -16.64%
LIABILITIES £0 -21.23%
Short Term Debt £2,608 16.48%
Accounts Payable £2,174 £58,333
Tax Liability £45,946 £3,602,190 –
Other Current Liabilities £4,195,846 -3.63%
Total Current Liabilities £0 151.57%
Long Term Debt £0 £2,162,074 24.55%
Deferred Taxes £2,083,632 9.94%
Other Non-Current Liabilities -£88,368
Total Non-Current Liabilities £45,570 £1,031,293 –
Total Liabilities £1,284,509 £3,105,000 –
EQUITY £3,413,712 17.29%
Retained Earnings £0 17.29%
Current Earnings £0 £0 9.96%
Other Equity £0 £5,368
Total Equity £6,296 £5,368 0.00%
Total Liabilities & Equity £6,296 £3,110,368 274.10%
£3,420,008
£1,000 18.30%
£1,000 £75,920 57.75%
£284,019 £414,903 16.48%
£490,820 £491,822
£775,838 £3,602,190
£4,195,846

KPIs Explained

% Margin of Orders Booked 22%

% Margin of Orders Booked = GP Value Orders Secured / Value Of Orders Secured * 100

Cash Flow Margin 0.53%
A measure of the company’s ability to turn sales into cash. The business converts each £100 of sales into £0.53 of
Operating Cash Flow. For this period, the Cash Flow Margin was less than the target of 3.04%.

Cash Flow Margin = Operating Cash Flow / Revenue * 100

Cash on Hand £254,435
A measure of the cash and cash equivalents in actual possession by the company at a particular time. At the end of this
period the company held £254,435 of cash and cash equivalents. Cash on Hand is above the required target of £0.

Cash on Hand = Cash & Equivalents

Enquiry Levels 911
Total number of enquries received

Expense Change 1.02%
A measure of the percentage change in total expenses for the period. While growing revenues, management need to
monitor expenses. A significant increase in expenses may indicate the erroding of margins and should prompt action. For
this period, expense growth of 1.02% was below the target of 3%.

Expense Change = (Expenses - Prior Expenses) / Prior Expenses * 100

GP Value Orders Secured £3,040,325
Gross Profit of Orders Secured

Gross Profit Growth 19.44%
A measure of the percentage change in gross profit for the period. For this period, gross profit growth of 19.44%
exceeded the target of 0.17%.

Gross Profit Growth = (Gross Profit - Prior Gross Profit) / Prior Gross Profit * 100

Gross Profit Margin 17.25%
A measure of the proportion of revenue that is left after deducting all costs directly related to the sales. For each £100 in
sales the business retains £17.25 after deducting the cost of sales. The gross profit serves as the source for paying
operating expenses. The gross profit margin can be further improved by improving price, volume and cost of sales
management. For this period, the gross profit margin % is below the required target of 18.57%.

Gross Profit Margin = Gross Profit / Revenue * 100

Net Profit After Tax Margin 2.14%
A measure of the proportion of revenue that is left after all expenses have been paid. The business makes £2.14 of net
profit for every £100 it generates in revenue. For this period, the Net Profit After Tax margin is below the required target.
This may indicate cost blowouts that require efficiency improvements.

Net Profit After Tax Margin = Earnings After Tax / Revenue * 100

Net Variable Cash Flow 26.03%
A measure of the additional cash that will either be generated or used up by the next £100 of products or services that the
business sells. If the Net Variable Cash Flow is positive then for every additional £100 of revenue the business will generate
cash. If the Net Variable Cash Flow is negative then for every additional £100 of revenue the business will require
additional cash funding. For this period, the Net Variable Cash Flow exceeded the target of 18.57%. The Net Variable Cash
Flow is 26.03% of gross revenue. Each additional £100 of Revenue will generate £26.03 of cash.

Net Variable Cash Flow = (Annualised Revenue - Annualised Variable COS - Annualised Variable Expenses - Operating Working Capital) /
(Annualised Revenue) * 100

Operating Profit Growth 77.36%
A measure of the percentage change in operating profit for the period. For this period, operating profit growth of 77.36%
exceeded the target of 2%.

Operating Profit Growth = (Operating Profit - Prior Operating Profit) / Prior Operating Profit * 100

Operating Profit Margin 6.18%
A measure of the proportion of revenue that is left after deducting all operating expenses. This reveals the operating
efficiency of the business. The business converts each £100 of sales into £6.18 of profits. The operating profit margin can
be further improved by improving price, volume, cost of sales and expense management. For this period, the operating
profit margin is below the required target of 6.44%.

Operating Profit Margin = Operating Profit / Revenue * 100

Revenue Growth 25.86%
A measure of the percentage change in revenue for the period. Management should ensure that revenues increase at rates
higher than general economic growth rates (ie. inflation). For this period, revenue growth of 25.86% exceeded the target
growth of 0.41%.

Revenue Growth = (Revenue - Prior Revenue) / Prior Revenue * 100

Total Revenue £13,246,156
A measure of the total amount of money received by the company for goods sold or services provided. The business has
earned total revenues of £13,246,156. Strategies to improve revenue may include increasing prices, increasing the volume
of sales through marketing initiatives or finding alternative sources of income. For this period, the revenue earned is above
the required target of £12,000,000.

Total Revenue = Revenue

Value Of Orders Secured £13,559,000
Value of orders booked